L&T - Q4FY13 Result Review - Angel Broking

Larsen and Toubro (L&T) posted decent set of numbers for 4QFY2013, which were broadly in-line with our expectation both on revenue and order inflows front. However, owing to higher-than-anticipated other income and lower tax rate PAT came in ahead of our estimate. On the top-line stood, L&T reported decent topline growth of 9.9% yoy to Rs. 20,294cr which was in-line with our estimate of Rs. 20,303cr. The decent growth in revenues was mainly driven by pick up in execution in the engineering and construction (E&C) and machinery & industrial product segment. On the EBITDA front, performance was as per our expectations with the company reporting a yoy dip of 180bp to 12.1% in 4QFY2013 against our expectations of 12.0%. On the bottom line front, L&T reported PAT of Rs. 1,788cr a decline of 6.9% and was higher than our estimate of Rs. 1,573cr. The PAT was higher than our estimate mainly due to huge surge in other income and lower tax rate. Other income grew 19.2% yoy to Rs. 374cr for the quarter.

As of 4QFY2013, L&T's order backlog stands at Rs. 1,53,604cr (excluding slow moving orders worth Rs. 17,000cr) registering a growth of 5.4% yoy. Order inflows for the quarter came in at Rs. 27,929cr (up 24.7% yoy) against our expectation of Rs. 23,000cr.

For FY2014, the management has given a guidance of 15-17% growth in revenue and 20% growth in order inflow. The guidance is mainly based on (a) high share of exports in both order inflows and revenues (power T&D and hydrocarbon) and (b) continued momentum in infrastructure segment (building and factories, railways, airports, etc).

We believe L&T is best placed to benefit from the gradual recovery in the capex cycle, given its diverse exposure to sectors, strong balance sheet and cash flow generation as compared to peers. We continue to remain positive on L&T while our target price is under review.

Source : Equity Bulls

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